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Intel inside where?

April 01, 2006

HO CHI MINH CITY, whose very name is meant to evoke the defeat of American imperialism, is about to get Intel inside. The Silicon Valley microchip maker -- and icon of triumphant American capitalism -- is building a $300-million factory in the city once called Saigon, a place most Americans associate with images of terrified people hanging on to evacuating U.S. choppers.

Intel Corp.'s arrival serves as an exclamation point to the remarkable transformation that Vietnam has undergone in the last decade. Like its Chinese neighbor to the north, the communist regime in Hanoi has embraced market reforms that have raised living standards and reduced rural poverty. The country may still fly a red flag, but Vietnam's young people are as eager to text message (and do deals) on their cellphones as their capitalist neighbors in Thailand are, and Intel's decision to build a plant there (instead of India) is an important vote of confidence in the nation's future.

Vietnam's opening to the outside world has been a remarkable turnaround. Long suspicious of the West and foreign investment, the country had endured so many wars -- with France, the United States, China, Cambodia, itself -- that its communist leadership looked singularly incapable of laying down a gun in exchange for a briefcase.

But now Vietnam's leaders are working hard to join the World Trade Organization, with negotiations entering the final stages. They are investing billions on infrastructure, and they understand that WTO membership will require more open trade and better legal safeguards for international investors.

Intel executives did not wait for the WTO paperwork to be complete. They are going ahead with plans for a mammoth new plant, announced in February and expected to be up and running by late 2007. It probably will be the largest single foreign investment ever in Vietnam, and it could double in size if all goes well in the first stage. The facility, which will package and test microchips for personal computers and mobile phones, is designed to serve Asia's booming market.

Doing business in Vietnam is not always easy, given the amount of red tape and the capricious nature of its enforcement. Still, Intel says it chose Vietnam because it could meet the chipmaker's basic needs: a reliable supply of electricity, clean water and a young workforce eager and willing to learn the tedious ropes of high-tech production.

The sense of historical irony is merely icing on the cake.

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